Islamic Finance Presentation--A View from the Mosque
It is often said that Islamic finance offers a wonderful opportunity for cultures to interact in the world of business. The theory, as I understand it, is that while so much of the Muslim world is consumed with rage at the West, and so many Americans are so convinced they are good people that they can't figure out why anyone could fail to see that, the world of commerce is where all might mingle peacefully, and trade their wares and through this come to understand one another better.
There is some truth to this generally (Islam spread through large parts of Asia and Africa through the work of Arab merchants, the expansion of American-Muslim trade relations I consider a positive development), but Islamic finance is possibly the worst example that could be raised respecting intercultural dialogue, from both the Muslim and the Western perspectives.
As for the Muslim perspective of Islamic finance, the whole enterprise is not about trying to figure out how to get along with the West, it's about how to create economic order independently of the West. There's lots of people in the Muslim world who want to get along with the West, only a small fraction of those care about Islamic finance. And certainly the genesis of the practice is a conscious effort by Islamic forces to separate, to create a space, to develop a new system of finance that is supposedly different from and fairer than anything the West has to offer. They are rejecting the transplanted, secular civil codes and the commercial order that was created in the post colonial state and doing something else.
Such a conscious effort at separation is hardly the start of a dialogue. I suppose there is interaction, much as there is among divorced couples who have a child, but the point is, Islamic finance and its intellectual forebear Islamic economics was trying to figure out how to remove itself from the decadent and secular West while still, out of necessity, interacting with it. That's still very much the rhetoric coming out of the mosques, in slightly less strident form these days.
As for the Western perspective, enough is said by the fact that they don't even know this reality. I just presented at the Asian Affairs Section of the New York City Bar Association yesterday, and today at my old law firm in New York, Debevoise & Plimpton, and though I am always nervous about presenting to practitioners my rather academic ideas, I thought both talks went well. While in both places some asked technical questions, which were quite good, there was also ample interest in, and confusion generated by, this whole idea of Islamic finance as a form of social justice. Inquisitive, curious, serious and very intelligent and dedicated people terribly fascinated with learning more about this social justice aspect. And some of these folks were familiar enough with the practice to engage in it from time to time, and still didn't know this very central idea of the purpose. Tell that to a Muslim who takes these things seriously, and he's confused. How could anyone who knows anything about Islamic finance not know its purpose is to create a separate economic and commercial order that is fairer than the West's, he might think? That's all we talk about.
But the reality is that to do Islamic finance, you don't actually have to listen to what the Muslims have to say. I think it could make for better advocacy if people did know, that was part of the point of my talks, but what is done now generally works well enough. Use the old models, develop some ideas from here and there that seem to fit with them and employ the same ideas, throw it before some shari'a review board that does its voodoo and blesses it, or finds a problem and then work your way around that. Obstacle course. And so is it seen by the Western practitioners, by the large financial institutions, by whoever, as a big obstacle course. I guess if that's how Muslims saw it as well, as an obstacle course that's challenging to navigate that maybe once had some purpose but is now self-perpetuating through inertia (and just plain fun), Islam's version of the hearsay rule and its exceptions, maybe then it's the source of dialogue among civilizations. Behold our respect, natives, for we have learned your ways.
Except for Muslims it's not. And most Western practitioners don't know that, and don't need to in order to practice Islamic law (though as noted above they are quite curious about it.) So I don't see the dialogue on the Western side either, you actually have to listen to Muslims to engage in dialogue, not a review board that is busy trying to mediate its own dilemma--how to sell the idea of Islamic finance as Muslim social justice (which I think many of them do believe genuinely, as implausible as it seems at this late date) and yet bless the transactions that the practitioners tell them have to be used to work, which are basically conventional finance run through the obstacle course.
Add to that the obfusaction that often occurs to convince the Muslim community that all of this nonsense has some glint of social justice to it (obfuscation like lack of transparency, needlessly complex artifice meant to confuse Enron style) and you don't have much of a dialogue and interaction. Going back to my early analogy, you have a spouse (Islamic finance) who wants a divorce because her husband keeps cheating on her, a husband (the practicing finance world adopting Islamic finance) who doesn't realize that's a problem and has never thought it affected their marriage at all and is surprised and curious when told but not really interested still in monogamy, and a marriage counselor, the review board, so desperate to keep them together it tells the one there's no real adultery going on, and the other that the adultery has to be, let's say Clintonesque, and then it's okay. As a temporary measure, on the way to true, pure monogamy, argues the counselor, even as he starts to sanction more and more seemingly adulterous activity from the errant husband. Not a "dialogue" I'd bet on working out in the longer term.
HAH
There is some truth to this generally (Islam spread through large parts of Asia and Africa through the work of Arab merchants, the expansion of American-Muslim trade relations I consider a positive development), but Islamic finance is possibly the worst example that could be raised respecting intercultural dialogue, from both the Muslim and the Western perspectives.
As for the Muslim perspective of Islamic finance, the whole enterprise is not about trying to figure out how to get along with the West, it's about how to create economic order independently of the West. There's lots of people in the Muslim world who want to get along with the West, only a small fraction of those care about Islamic finance. And certainly the genesis of the practice is a conscious effort by Islamic forces to separate, to create a space, to develop a new system of finance that is supposedly different from and fairer than anything the West has to offer. They are rejecting the transplanted, secular civil codes and the commercial order that was created in the post colonial state and doing something else.
Such a conscious effort at separation is hardly the start of a dialogue. I suppose there is interaction, much as there is among divorced couples who have a child, but the point is, Islamic finance and its intellectual forebear Islamic economics was trying to figure out how to remove itself from the decadent and secular West while still, out of necessity, interacting with it. That's still very much the rhetoric coming out of the mosques, in slightly less strident form these days.
As for the Western perspective, enough is said by the fact that they don't even know this reality. I just presented at the Asian Affairs Section of the New York City Bar Association yesterday, and today at my old law firm in New York, Debevoise & Plimpton, and though I am always nervous about presenting to practitioners my rather academic ideas, I thought both talks went well. While in both places some asked technical questions, which were quite good, there was also ample interest in, and confusion generated by, this whole idea of Islamic finance as a form of social justice. Inquisitive, curious, serious and very intelligent and dedicated people terribly fascinated with learning more about this social justice aspect. And some of these folks were familiar enough with the practice to engage in it from time to time, and still didn't know this very central idea of the purpose. Tell that to a Muslim who takes these things seriously, and he's confused. How could anyone who knows anything about Islamic finance not know its purpose is to create a separate economic and commercial order that is fairer than the West's, he might think? That's all we talk about.
But the reality is that to do Islamic finance, you don't actually have to listen to what the Muslims have to say. I think it could make for better advocacy if people did know, that was part of the point of my talks, but what is done now generally works well enough. Use the old models, develop some ideas from here and there that seem to fit with them and employ the same ideas, throw it before some shari'a review board that does its voodoo and blesses it, or finds a problem and then work your way around that. Obstacle course. And so is it seen by the Western practitioners, by the large financial institutions, by whoever, as a big obstacle course. I guess if that's how Muslims saw it as well, as an obstacle course that's challenging to navigate that maybe once had some purpose but is now self-perpetuating through inertia (and just plain fun), Islam's version of the hearsay rule and its exceptions, maybe then it's the source of dialogue among civilizations. Behold our respect, natives, for we have learned your ways.
Except for Muslims it's not. And most Western practitioners don't know that, and don't need to in order to practice Islamic law (though as noted above they are quite curious about it.) So I don't see the dialogue on the Western side either, you actually have to listen to Muslims to engage in dialogue, not a review board that is busy trying to mediate its own dilemma--how to sell the idea of Islamic finance as Muslim social justice (which I think many of them do believe genuinely, as implausible as it seems at this late date) and yet bless the transactions that the practitioners tell them have to be used to work, which are basically conventional finance run through the obstacle course.
Add to that the obfusaction that often occurs to convince the Muslim community that all of this nonsense has some glint of social justice to it (obfuscation like lack of transparency, needlessly complex artifice meant to confuse Enron style) and you don't have much of a dialogue and interaction. Going back to my early analogy, you have a spouse (Islamic finance) who wants a divorce because her husband keeps cheating on her, a husband (the practicing finance world adopting Islamic finance) who doesn't realize that's a problem and has never thought it affected their marriage at all and is surprised and curious when told but not really interested still in monogamy, and a marriage counselor, the review board, so desperate to keep them together it tells the one there's no real adultery going on, and the other that the adultery has to be, let's say Clintonesque, and then it's okay. As a temporary measure, on the way to true, pure monogamy, argues the counselor, even as he starts to sanction more and more seemingly adulterous activity from the errant husband. Not a "dialogue" I'd bet on working out in the longer term.
HAH
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